Faculty of Management science

Procurement and Logistic Management Department

Lecturer: Nor Hirsi Adan
Course Name: contract and supplier relationship
management
 Weeks Contents/Topics Chapters
1 History procurement logistics and introduction to Negotiation skills 1

2 Wants and Needs 2

3-4 Setting Objectives and Determining Positions 3

5 Supplier selection methods 4

6 Power in Negotiation 5

7 Negotiation Model: Stages with Critical Tasks 6

8 Negotiating Styles and Key Skills 7

9 Revision 0

10 Midterm Exam

11-12 Win-Win Tactics 8

13 Outsourcing management 9

14 Tactical Orientation 10

15 Special Negotiation Situations 11

16 Putting It All Together 12

17 Revision 0

18 Final Exam Performance

 CHAPTER ONE

The Need for Negotiation

 Chapter outline
• Introduction
• Conflicts inside organization
• Nonproductive Reactions to Conflict
• Conflict with Customers
• Process of Exchange
• Introduction to Planning and Executing the
Negotiation
• Audience for Practical Negotiating
• KEY POINTS
 INTRODUCTION
Conflict is inevitable; therefore, negotiation is a survival skill.
Conflict: A situation where two or more parties have interests or
perceptions that differ.
Negotiation: A process of exchange to resolve conflict and reach a
mutually beneficial agreement.
Consider the number of conflict situations any person experiences in his
or her life. From early childhood, we recognize conflict as a part of life.
negotiation becomes the preferred method for reaching agreements. is
negotiation the preferred method? First, both parties
maintain control of the process. Second, if done well, the negotiation
can strengthen the relationship between the parties and lead to a deeper
understanding and respect—especially, if a long-term relationship is
desirable.
Negotiation involves continued interaction and dialogue between parties
to find a solution with maximum advantages to both. when one of the
parties is powerless, politically, psychologically, or
physically, to say no. If you can’t say no, call the situation hopeless
but don’t call it a negotiation
• Conflict inside Organizations
One of the most significant ground for generating conflict is the workplace. As
organizations become less hierarchical and more cross-functional, managers as
well as individuals are under increased pressure to resolve conflicts. Other
development in business such as lean manufacturing, downsizing, and increased
competition for resources also contribute to the increasing frequency of conflict.
• Nonproductive Reactions to Conflict
How do people in organizations react to conflict? Some adopt a strategy of denial,
choosing to ignore the conflict or pretend that it doesn’t exist. They declare that
conflict shouldn’t exist in organizations because we all share the same goals and
objectives.
Most people don’t enjoy dealing with conflict, so another common reaction is
escalation to a higher authority. Let someone else resolve it. Still another
reaction is to capitulate and give in whenever conflict arises. This occurs when
someone principles peacekeeping more than his or her own needs and desires.
Ignoring the conflict, escalating to higher authority, giving in, and responding
passive-aggressively are not productive ways to deal with conflict.
The challenge for managers and employees involves learning how to resolve
conflict, not to minimize or ignore it. This requires negotiation.
Conflict with Customers
Conflict in the arena of sales, and the relationship between the supplier and the
customer, deserves special consideration. Most salespeople tend to think of
themselves as good negotiators because they have numerous opportunities to
negotiate with customers. In workshops with salespeople over the years, their classic
dilemmas usually involve two questions:
1. When do I stop selling and start negotiating?
2. How do I avoid giving away too much to make the sale?
Conflict arises in several areas. First, the customer has competing demands for his or
her attention. Second, the customer wants the supplier to start making concessions
early (i.e., between interest and decision), while the supplier attempts to hold firm until
after the decision has been made and other suppliers are eliminated. We hear
salespeople complain: Finally, conflict surfaces in customer situations that involve the
interaction of the salesperson as an advocate for the customer with his or her
company. This phenomenon is best represented by the equation.
You’ve just made a deal for a major piece of business with a new customer. Now you
have to fight for the resources to make it happen, such as pricing, delivery, credit and
payment terms, technical support, and others. Once the deal is done with the
customer, the salesperson’s internal negotiating has just begun. Chapter 11 cover
specific techniques to handle internal negotiations.

Please have a look the figure:- in the PDF

•Process of Exchange
In the varied ways we exchange currencies for goods and services,
negotiation is only one of several processes of exchange.

Pleases have a look the figure:- in the PDF

The Figure represents a hierarchy of the exchange processes based
on level of power.
The FIGURE Process of Exchange and Power for four steps
 Not Engaging:-not engaging strategy involves a refusal to even open the
negotiation.
Fixed Price:- The next exchange option is fixed price (i.e., take-it-or-leave
it). Most American retail trade is based on this process.
Bargaining/Haggling:- Bargaining, a third process of exchange, involves two
parties arguing or haggling over a single currency, usually price. Most of us
are familiar with bargaining and consider it negotiating. But the real
distinction between the two involves the use of multiple currencies in
negotiating.
Negotiating:-Negotiation is the process of exchange that provides the
highest likelihood of satisfying the needs of both parties.
Introduction to Planning and Executing the Negotiation
1. Planning the Negotiation
As a result this Section One, you learn to:
• Identify and satisfy the underlying needs of both sides: Identifying and
satisfying the underlying needs of all parties is at the very heart of good
negotiating. Many times, people fail to distinguish between wants and needs.
In Chapter 2.
• Develop negotiating objectives and establish a position: Successful
negotiators are not only aware of their wants and needs, but also use this
information to develop their objectives and plan their position. In Chapter 3,
• Become more skillful and creative at using currencies and concessions: The
concept of exchange—the give-and-take of various currencies or resources—is
an integral part of the process of negotiation. After the underlying needs and
interests of all parties have been identified, the next step is to explore and
exchange currencies or resources that will satisfy the needs of each. Chapter 4
• Assess your power in negotiation situations: Many people faced with a
negotiation situation underestimate their power simply because they are not
aware of their options. Consequently, they may adopt a one-down position and
be too willing to make concessions. Others may overestimate their power, act
aggressively, and face a lose-lose outcome.
2. Executing the Negotiation
As a result of this Section Two, you learn:
• A model for the process of negotiating that has stages and critical tasks: Although
every negotiation is different, successful negotiators tend to follow a certain road map
through the three stages of negotiation: (1) opening, (2) exploring, and (3) closing. In
each stage, the negotiating process involves critical tasks and behaviors. In Chapter 6,
each stage is explained,
• To identify your negotiating style and become more flexible in using various skills: in
Chapter 7, you can determine your negotiating style and explore ways to become more
flexible. In addition, certain communication skills such as questioning and listening, or
being more direct and assertive, will serve you well in negotiating.
• To select and use tactics conducive to a win-win outcome: Many books, articles, tapes,
and other materials have been published espousing a win-win philosophy. in Chapter 8,
the specific tactics and behaviors that ensure the best chance for a positive outcome are
fully explored.
• To respond to adversarial situations and difficult people: Sometimes people play dirty
and use adversarial tactics to gain an advantage. Chapter 9 provides a comprehensive
treatment of what these tactics look like and how to respond and counter difficult tactics
used by the other party.
• To plan and prepare for real-life negotiations: Chapter 11 deals with specific situations
such as buy and sell, internal negotiations, negotiating with your boss, and team
negotiations.
Audience for Practical Negotiating
Throughout this book, we explore three main areas of negotiating
audiences:
1. Personal situations: Individual consumers with purchases large
enough to warrant negotiation as the technology of exchange such as
buying a car, house, or property.
2. Organizational situations: Managers and employees who perform
standard business functions such as creating a budget, making
purchases for their company, negotiating for resources in the company,
and so on.
3. Customer situations: Selling products and services where a long-term
relationship is appropriate.
KEY POINTS
☞ Conflict is inevitable. Negotiation is a survival skill.
☞ Conflict is a situation where two or more parties have interests or
perceptions that differ.
☞ Negotiation is a process of exchange to resolve conflict and reach
a mutually beneficial agreement.
☞ Methods for resolving conflict include mediation, arbitration,
litigation, and negotiation.
☞ Negotiation is the process of exchange that provides the highest
likelihood of satisfying the needs of both parties, while maintaining
the relationship.
☞ Conflict exists in many venues (e.g., in organizations or families;
with customers).
☞ Power determines the choice of which process of exchange to use
(i.e., not engaging, fixed price, bargaining, or negotiating).
The End